The Canadian dollar closed higher Wednesday as a much better than expected domestic trade report trumped geopolitical concerns.
The Canadian dollar. —Canadian Press file photo
The loonie was up 0.39 of a cent to 91.63 cents US as Statistics Canada reported that the country’s trade surplus shot up to $1.9 billion in June from a revised $576 million in May.
Economists had generally expected a $100-million trade deficit. The improvement came as exports rose 1.1 per cent to a record high of $45 billion in June, while imports declined 1.8 per cent.
Exports of energy products were up 2.5 per cent to $11.9 billion. Crude oil and crude bitumen increased 2.8 per cent to a record high of $8.9 billion, as prices rose 2.2 per cent.
Despite the small gain for the loonie, it was generally a risk off day on financial markets with geopolitical worries were front and centre after news reports emerged about a buildup of Russian troops on the Ukraine border. On Tuesday, Poland’s prime minister said he had information indicating that there was a growing threat of a “direct intervention” by Russia in Ukraine.
In addition, Russian president Vladimir Putin has told his government to prepare retaliatory measures against sanctions that have been levied by the U.S. and the EU for his country’s support of Ukrainian rebels.
There was also glum data out of Europe.
Italy’s gross domestic product contracted 0.2 per cent in the second quarter, which added to a negative showing in the first quarter, meaning the country is in technical recession.
And German industrial orders were 3.2 per cent lower than in May, when they also fell by 1.6 per cent.
The Federal Statistics Office said that geopolitical developments and risks were a likely cause for the decrease in new orders and that they expected only moderate development in the coming months.
Nervous investors bought into the U.S. currency and sent gold prices higher.
By Malcolm Morrison
THE CANADIAN PRESS—TORONTO